JEA CEO: Board was ‘wholly unprepared’ for Jacksonville utility privatization debate

On Tuesday, the board of Jacksonville’s public utility JEA picked former board member Aaron Zahn as its new interim CEO to serve for the next year.

Meanwhile, CFO Melissa Dykes, passed over the CEO opening, will receive some sort of role change.

Zahn and Dykes appeared at Thursday’s meeting of the Jacksonville City Council special committee on the “future of JEA” (a rechristening of the panel). They presented a united front.

Zahn’s selection nettled certain Councilors who have been skeptical about JEA’s latest moves since the privatization push began months ago.

John Crescimbeni, the chair of the committee, doesn’t see a path clear to re-appointment of the current board given actions in recent months. And Councilman Garrett Dennis introduced a bill to take away the mayor’s absolute control over the nomination process for the JEA Board.

All of that was prologue to a series of mea culpa moments and trust exercises.

Zahn took the mike.

“Discord in any form can be paralyzing,” Zahn said in his first words to the Council. “The public discord of the last four months has felt personal to many of our employees.”

Zahn described JEA’s board as “wholly unprepared” for the discussion of the last four months; however, he added, the discussion “elevated many important questions,” and “created a new lens” to “view the utility of the future for Jacksonville.”

Answering questions from Council members, Zahn continued to balance the tropes of “discord” and “stability.”

Zahn wriggled through answering a question regarding whether he’d want to be a permanent CEO, with Councilman Tommy Hazouri expressing concern about the JEA Board.

“It continues to create a cloud of mistrust,” Hazouri said, regarding the seemingly predetermined selection of Zahn, a board member for a matter of weeks, as interim CEO.

Council President Anna Brosche described a “fierce conversation” between Dykes, Zahn, and her.

“We can’t unring the bell of the last four months,” Brosche said, but prior to that communication was strong, the current “trust challenge” notwithstanding.

“The buck stops here with the CEO,” Zahn said, vowing to take “responsibility and ownership.”

Brosche wanted commitments from Zahn that he would not move forward exploring a sale without explicit JEA Board consent; Zahn replied that he would consult with stakeholders, such as the Council, before moving in that direction.

Brosche thanked Zahn for his admission that the board was “wholly unprepared.”

“You can’t unring the bell,” the Council President added, “and neither can we.”

Later in the discussion, Brosche asked if Zahn sensed an “air of distrust” between JEA and Council; in a long-winded, passive voice construction, Zahn conceded the President’s point.

“Some people will never trust you,” Zahn said, “and I can’t help that.”

Councilman Dennis was next, and trust was an issue for him.

Zahn confirmed that there may be a path to apply for the permanent CEO gig, saying, in response to goading from the Councilman, that if Council wanted to bar him and “disqualify a perfectly good candidate,” that was its prerogative.

But he would like the opening to pursue his “personal passion” of running a utility, maybe.

When asked to provide an open calendar regarding meetings with lobbyists and other potential suitors for JEA, Zahn vowed to do that, but with caveats

He characterized himself later as an “innovator and an entreprenuer,” and uniquely qualified to examine “the business model and how to position it to take advantage of trends.”

Zahn defended his presentation as an interim CEO candidate, noting that upon his resignation, he had suggested structural changes to the org chart to redefine the role of CEO that was “set up for failure.”

The JEA CEO confirmed that “until ordered otherwise,” the privatization discussion would be held in abeyance in favor of a laid-out strategic plan.

Councilwoman Lori Boyer pressed Zahn further on privatization, with Zahn alluding to “grades of investigation” of the process.

“We all need to look at the business model, and it’s clear the reasons why,” Zahn said, discussing it in the framework of  “capitalization strategy.”

Boyer pressed Zahn on his desire to put a “pause” on privatization, given the discussions of such happening at JEA unbeknownst to Council.

“If we put a pause button on the public conversation, do we have assurance that there is a pause on the private conversation,” Boyer asked.

Zahn contended that the management team is not pursuing such, though “whiteboard discussions” are a different matter. The board, he said, would have to recommend it formally first, at the board level.

Zahn also confirmed that JEA lobbyist Mike Hightower and former CEO Paul McElroy enlisted him for what turned out to be a brief board tenure.

And Zahn, when asked about the value of JEA, said that without bids it was just a hypothetical concept — one that won’t be a priority of his “over the next six to twelve months” as he works through structural revamps.

This didn’t satisfy Councilwoman Joyce Morgan, who battled to get Zahn to be transparent about how privatization might make it onto a JEA Board agenda. Zahn mentioned, in his answer, that he was a philosophy major in college; a fun fact, but not a straight answer.

Council Vice President Aaron Bowman, poised to take over the gavel at the end of June, was much more positive about Zahn than some others.

“We’ve learned a heck of a lot over the last couple of months. We needed to know a lot more than we did,” Bowman said. “When we talked yesterday, we talked about how disruptive these meetings have been to your organization.”

Bowman pitched a pause on JEA special committee meetings altogether.

“Now is probably a pretty good time to stop these meetings … give you the reins and come back in a couple of months,” Bowman said.

“I’m never going to tell shareholders what to do,” Zahn said, saying that pausing the committee is the Council decision before saying he agreed with Bowman.

“If we’re clear that this committee is just a discussion, our employees can sleep easier at night,” Zahn said, adding that the time impact takes a “significant toll” on senior leadership, and an “attacking format” makes it worse.

After the meeting, Zahn clarified some of his comments, including drawing a distinction between privatization, monetization (“returning capital to stakeholders”), and a change in business model.

Whether Zahn is looking to privatize or not, multiple Emera lobbyists were standing in the back of the room, watching with great interest.

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After Zahn’s q&a wrapped, CFO Melissa Dykes handled some technical questions, with Zahn having moved on to another engagement.

Dykes defended the decision to close down the coal burning St. Johns River Power Plant, which compelled JEA to buy power on the market as it waits for nuclear Plant Vogtle to go online in Georgia, by comparing the plant to a “30 year old school bus” and saying that operating the plant came at too high a cost, given transport costs for coal and other contributors.

Councilman Danny Becton said that Council hadn’t paid enough attention to JEA decisions, and that needs to change.

Jordan Pope, JEA’s governmental relations manager, then stepped to the mike, describing what he called an “aggressive” five-year capital plan, “one that is needed” as JEA “has a lot of work to do.”

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The meeting, which sprawled over the four hour mark, felt like conversation under the current parameters had been exhausted.

It seemed clear that there was some appetite for the end of the committee also, in light of there being no public push to privatize at this time, and in light of the majority of Council members leaving around the two hour mark.

One public commenter, a JEA employee, expressed disappointment with those members having left, and skepticism with Council members “drinking the Kool-Aid” and taking Zahn at face value.

Time will tell if there is a motion at a future Council meeting to sunset the panel.